Japan, Thailand Ink Controversial Trade Pact

Thailand will eventually eliminate all tariffs on steel imports.

Japan ,on April 3, signed a controversial free trade deal with Thailand, which hopes to hearten foreign investors unnerved since the kingdom's coup. The deal slashing more than 90% of tariffs had been in doubt for months due to Japan's uneasiness over the military takeover and street protests by anti-globalization activists in Bangkok.

Under the agreement, about 97% of Japanese exports to Thailand and 92% of Thai exports to Japan will be tariff-free within 10 years. Tokyo will scrap tariffs on Thai shrimp and tropical fruit such as mangoes and durian, although it will keep protecting Japan's politically powerful rice farmers. Thailand will cut tariffs on automobiles with engines of 3000 cc or larger to 60% from 80% over four years and eventually scrap all tariffs on steel imports. Thailand is trying to transform itself into the "Detroit of the East" and has become a major construction hub for Japanese automakers.

Thailand's army-installed Prime Minister Surayud Chulanont paid his first visit to a Group of Eight nation since the coup to sign the deal with his counterpart Shinzo Abe. Surayud hopes the pact with Thailand's largest investor will ease worries in the business community about the junta's protectionist policies.

But hours before the signing, demonstrators burned a mock free-trade agreement in front of the Japanese embassy in Bangkok, holding a banner that said, "Free Trade Agreement with Japan is horrible. It only benefits Japan." Activists -- some of whom were part of protests against Thaksin before his ouster -- say the free-trade deal will turn Thailand into a dumping ground for Japan's toxic waste. Abe said Japan has "addressed the concerns" over toxic waste and Surayud replied that he was satisfied with "Japan's sincere attitude," according to Seko.

Japan has historic political and economic ties with Thailand, with the two countries conducting $42 billion in trade last year.

Japan, the world's second largest economy, has been seeking a growing number of bilateral free-trade deals amid the breakdown in global liberalization talks. It has already inked trade pacts with Thailand's neighbor Malaysia as well as Singapore and the Philippines.

Copyright Agence France-Presse, 2007

TAGS: Trade
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